As of July 1st, 2019, with the passage of Nashville Council Bill BL2019-1627, the cost to obtain a short term rental permit (STRP) is now $313. The STRP permit fee was $50, which we can all agree was laughable. This change comes as a result of a 9 month fee study that sought to determine the true cost to obtain a short term rental permit from Metro Nashville.

As of January 1st, 2022, with the passage of Nashville Council Bill BL2019-1633, Nashville will no longer issue non-owner occupied short term rental permits (NOO STRPs) in RM zoning. However, anyone that has a NOO STRP prior to January 1st, 2022 will be grandfathered forever making that permit quite valuable. Owner occupied STR permits will continue to be issued. For additional info read my write up on BL2019-1633.

Short Term Rental Permit – New Construction

By the end of this month Catalyst Vanderbilt, a 16 unit NOO STR development for VRBO, will be closed out. This development sold out during a one day pre-sale event earlier this year with prices in the low to mid $700,000. Catalyst Vanderbilt was developed, designed and built by the Urban Development Group.

By the middle of October, Vibe East Nashville, a 38 unit NOO STR development, will be closed out. This development consists of 5 phases, all of which sold out during their pre-sale events. Prices ranged from the mid to high $300,000’s for the 3 bedroom homes and in the lower $500,000’s for the 4 bedroom homes.

NOO STRS for VRBO Coming Soon

We have quite a few new construction developments that will pre-sell in Fall 2019. In fact, we have 6 different developments with more than 175 opportunities to purchase a NOO STR and 1 development with 18 opportunities to purchase an owner occupied STR within 4 miles of downtown Nashville. Prices will start at $250,000 and go well over $1,000,000 for a downtown penthouse in a new development called Muse Nashville (pictured). Be sure to get one my pre-sale list by emailing me at grant@granthammond.com or by using the form below. We do keep this page up to date with off market Nashville VRBOs for sale.

As the Nashville short term market continues to grow, the Metro Council continues to grapple with how to properly regulate short term rental permits. With BL2019-1633 filed by Council Member Burkley Allen, the Council sought to do a couple of things: bring Nashville’s short term rental rules into compliance with current State laws and to eliminate non-owner occupied short term rental permits. It’s the second part of this Bill that a core group of individuals set out to influence in a meaningful way. Below is the recap of the last 90 days of our activities:

Key take-aways from the newly passed BL2019-1633

It’s business as usual for all RM zoned properties until Jan 1, 2022. You can obtain new permits, transfer permits, etc.

The original start date of October 31, 2019 no longer exists

You no longer have to file an intent to lease with Metro by Jan 1, 2020

You no longer have to obtain a building permit by July 2020

You no longer have to worry about the “death penalty”

There is a very important item engineered into this legislation that we can talk about privately

Timeline of Events for BL2019-1633 and Our Actions

On May 20th Council Member Burkley Allen filed BL2019-1633 just hours before the filing deadline and with no public vetting or input. In the original version of the Bill, she eliminated all new RM permits effective October 31st, 2019. The original version had no provision for transfers and included a “death penalty” after 3 substantiated complaints that was not aligned with current rules. This filing came as a shock to all of us in the industry and caused a mild panic. Immediately, a core group of attorneys, owners, builders, developers, appraisers and Realtors formed to analyze the proposed legislation and to give the greater real estate industry a central place to game plan and influence potential outcomes. This group is comprised of the best and brightest in their respective fields.

One of our early tasks was to coalesce support by engaging and educating the affected local industry associations and their membership. This included but was not limited to GNR, WCAR, HBAMT, NASTRA, and AI. This is likely when you first heard about the Bill and its negative effects on our industry. We used feedback from these meetings and conversations to engage Council Member Allen in multiple small meetings on May 24th, June 4th and June 17th. It was during these small meetings that we confirmed her strategy, cemented her talking points and learned how to influence future versions of the Bill.

The next step was to engage Council Member Allen in an open forum with a list of carefully prepared questions. This occurs on June 27th with just over 250 members of the community participating. This forum lasted over 2 hours and created a public record from which to work (Watch Full Video of Meeting). It was during this period that Council Member Allen introduced a substitute Bill that among other things included a deferred start date and gave all existing RM NOO STR permit holders the right to transfer permits in perpetuity. As predicted, this set up a shockwave throughout Council and especially agitated the original BL2017-608 authors. While not a perfect substitute Bill, we began to significantly alter the 2 cornerstones of Council Member Allen’s original Bill.

The next more public step was to get members of the community to attend the July 2nd Nashville Metro Council meeting and to speak out against the Bill during the public hearing. We initially thought it might be difficult to convince the community to attend and speak, but more than 50 individuals from all walks of life spoke passionately against the Bill. There were several goals for this evening, but a major one was to attempt to stall the Council vote. It was during this Council meeting that Council Member Allen’s substitute Bill was adopted with a majority of members supporting. Immediately following the substitute Bill vote, and as predicted by our legal team, the Council voted to defer the vote on the newly substituted Bill. Start watching Council meeting video at 1:01:23

Using this newly minted public platform, the group increased its meetings with other Council Members. I don’t want to reveal the specific content of those meetings, but our goal was to influence certain members into taking predictable actions prior to the next Council meeting. These meetings were successful.

On July 16th the Metro Council met again, this time with a large group of yellow shirts in the gallery emblazoned with “Property Rights” on the front. Our efforts to delay the vote were again successful as you can see starting at 1:45:08

Our core group met and spoke regularly after July 16th and game planned 8-10 probable outcomes. We knew that we would not be able to defer the vote another Council meeting and decided to let several key Council Members puts their cards on the table. We went silent several days prior to the August 6th Metro Council meeting to gauge our progress to date. This was a highly entertaining meeting full of amazing Council Member debate, indecision, anger, confusion and subterfuge. When the dust settled, the substitute Bill was amended to limit the number of transfers to 2, but left the rest of the Bill intact. This was better than we hoped for and, more importantly, we finally saw all of the cards on the table. Of course, the yellow shirts were there watching too. Watch Council meetingvideo starting at 6:01:59

With the clarity of the now substituted and amended Bill, the group met and spoke nearly constantly between August 7th and the August 20th Council meeting. We identified 5 potential outcomes: 3 outcomes that were good for us, 1 mediocre (Council punting to the next session) and only 1 that was bad (reducing Council Member Allen’s Bill as substituted and amended to 1 or 0 transfer). We ranked the outcomes, game planned the next steps and lobbied to ensure the STR marketplace would be protected. Quite a few actions were taken during this time by members of the group as well as by strategic partners (politics sometimes makes for strange bedfellows). As predicted, there were several amendments filed for consideration last as well as 2 substitute Bills, one of which turned out to be a very welcome surprise. The surprising substitute Bill came from the original authors of BL2017-608 Henderson, Hagar and Johnson. In their substitute, we were surprised to see them wipe away all of the filing requirements and milestone hurdles of Council Member Allen’s original Bill. We were then shocked to see their delayed start date of Jan 2022, 2 years and 4 months from now. As anticipated, their substitute included no new permits or transfers in RM zoning past the effective date. We now had another potential outcome that was better than 1 of the 3 previously identified positive outcomes prior to the release of late filed amendments (we received a copy on Monday August 19th at 11:17am).

During the August 20th Council meeting, the body skipped consideration of the amendments and began deliberation on the Henderson/Hagar/Johnson substitute Bill first. This came as a surprise, but we were all very interested to see if Council could stumble their way into passing this new substitute Bill. The substitute Bill sponsors laid out their typical points and were bolstered by unwitting accomplice Council Member Sledge. With only one Council Member standing up in opposition, they moved to take the vote and the new substitute Bill passed 25 to 5 with 2 abstentions and 7 not voting. Start watching Council meeting video at 1:59:53

Conclusion and Next Steps for RM Zoning

Now that we have completed our work with BL2019-1633 and the Nashville Metro Council, we can now move on to the second phase of our plan. As much as I’d like to share that plan, we cannot risk outlining in a public forum. I am happy to discuss with you individually (as long as you pinky swear to extreme secrecy) so you can understand where we are heading and how we plan on resolving the NOO STRP issue in RM zoning once and for all. I can say this: at the beginning of this process, a delayed start date was an extremely important goal for the group. We had hoped to move Council Member Allen’s proposed October 31, 2019 start date back 6-9 months. We never allowed ourselves to dream that we’d get 28 months!

If you’ve read all the way to this point, you understand the importance of working with a real estate professional who is entrenched in not only the marketplace, but also the politics to protect your investment. Please choose to work with a Realtor who understands what he/she is selling and how to properly guide you. See our complete list of short term rentals for sale in Nashville.

Taylor Germantown is a luxury 22 home brownstone development that straddles two sides of Taylor Street on 2nd Avenue in Historic Germantown. Steve Ezell and Mike Hartley of Landmark Realty Services and Trimark Builders are bringing their considerable experience to bear along with principal Michael Ward of Allard Ward Architects to create a modern community that seamlessly melds into it’s historic surroundings. No detail has been ignored down to the color and reflectance of the commercial brick and the R-factor of the sealant on the Sierra Pacific window package. The development team strove to give each and every home features that would set these homes apart from the marketplace and those details are numerous: New York loft-style open tread metal stairs between the 2nd and 3rd floors, 25 foot light well vault above the wet bar, CAT6 & RG6 prewire for gigabyte capable homes and more.

Many of these homes are 3 bedroom, 3.5 bath, 2 car and all feature a roof top terrace with considerable views that will only get better with the development of the TPA and Neuhoff sites. Phase 1 consists of 8 homes that have been under construction for nearly 12 months and will deliver in July, 2019. Phase 2 will begin in the next 30 days and will deliver prior to the end of 2019 as all of the infrastructure and site work has already been completed. Phase 3 is located on the north side of Taylor Street and will not commence until Phase 2 is mostly complete as Phase 3 will be used as a construction staging area to facilitate a faster build in Phase 2.

Taylor Germantown has not been officially listed for sale, but we have sold several homes based on our location alone. Here is our pre-listing pricing that will absolutely change once we have our launch party and officially list these homes on the MLS:

Site Map #

1

2

3

4

Address

211 Taylor Street

209 Taylor Street

207 Taylor Street

205 Taylor Street

Profile

2,046 sf – 3 bed, 3.5 bath, 2 car

2,014 sf – 3 bed, 3.5 bath, 2 car

2,014 sf – 3 bed, 3.5 bath, 2 car

2,014 sf – 3 bed, 3.5 bath, 2 car

Completion

7/30/19

7/30/19

7/30/19

7/30/19

Price

SOLD

$709,900

SOLD

SOLD

Site Map #

5

6

7

8

Address

203 Taylor Street

1331 2nd Avenue North

1329 2nd Avenue North

1327 2nd Avenue North

Profile

1,906 sf – 3 bed, 3.5 bath, 2 car

3,883 sf – 5 bed, 4.5 bath, 2 car

2,148 sf – 3 bed, 3.5 bath, 2 car

2,166 sf – 3 bed, 3.5 bath, 2 car

Completion

7/30/19

8/30/19

7/30/19

7/30/19

Price

$689,900

$1,495,000 – offer

$739,900

$749,900

Germantown Neighborhood Transitioning Quickly

Immediately to the east of Taylor Germantown is a large full neighborhood block light green warehouse that used to house a Goodwill Industries sorting facility. That entire site was acquired by the TPA Group from Atlanta in 2018. The TPA Group is a private real estate investment, acquisitions, and development firm whose principals have acquired and developed in excess of 30 million square feet and 30,000 acres – all valued at more than $10 billion. TPA is planning a mixed use development called Germantown Union and I have attached their “First Look” book to this email. It includes creative office space, a boutique hotel and a food hall that is rumored to be the Gun Show from Atlanta.

Contracting Phase 1 Taylor Germantown

We utilize a developer contract and give buyers 2 hours of time with our interior design team at Shonna Sexton Studio. Our contracts require a 5% earnest money deposit and proof of funds or financing. Phase 1 is fairly far along, but there are opportunities to make your design ideas a reality. Contact Grant Hammond for a private tour of Taylor Germantown: 615-945-7123

Taylor Germantown Phase 2 & 3 Pricing

It has become very clear to us that the heart of Germantown is in the process of shifting towards the river. With the more than $800,000,000 of development outlined above, we are expecting to price our future phases in the $400/sq ft or higher range. Should you be interested in a Phase 2 or 3 home, we are creating a priority waiting list. Please respond below with your contact information to be added to that list.

As Nashville has rocketed to the top of the bachelorette party destination list, so has the rental demand for Airbnb properties close to the downtown core. Owning a short-term rental can be a financial windfall for owners, but make sure you do your homework first. If you are considering making an investment in a short-term rental property in Nashville, here are a few things to consider:

The City of Nashville Regulates Airbnbs

Your property must be properly zoned, your neighborhood and HOA both allow short term renting and you must obtain a short-term rental property permit from Metro Codes in order to operate a short-term rental business from your property. As of January 1st, 2018, there are only 2 types of permits: Owner Occupied and Non-Owner Occupied.

Owner occupied short term rental permits: must be your primary residence, must be owned in your personal name (no LLCs, GPs, joint ventures, etc), must be confirmed by 2 documents showing the owner in fact occupies as their primary residence, must be in a neighborhood or homeowners association that allows short term renting, may include the rental of a single room or the entire residence.

Non-owner occupied short term rental permits: must be in a properly zoned non-residential district, are not a primary residence, applicant information must match the recorded deed, must be in a neighborhood or homeowners association that allows short term renting.

Obtaining a Short Rental Permit is Hard Work

Like dealing with most government entities, the Nashville Metro Codes department can steal small pieces of your soul. However, if you come prepared for long lines, overworked employees and all required materials, you’ll be just fine.

To obtain a short-term rental permit (STRP in our jargon), you’ll need several items including: a floor plan of your property showing egress windows, doors and smoke detectors; proof of liability insurance; proof of notification to adjacent property owners; proof of tax payments; responsible party documentation; homeowners association affidavit; and a notarized affidavit. Once you gather these materials, you’ll then meet with a zoning examiner who will start the application process. If you pass, the fire marshal will schedule a verification inspection at your property fairly quickly. If you pass again, congratulations, pay a $50 permit fee, post your permit on all listings, remit your required taxes and don’t forget to renew your permit every 365 days.

Oh, did I mention you must also obtain a Hotel Occupancy Privilege Tax Account Number, collect and remit those taxes for each rental to the State Finance Department no later than the 20th day of each month following collection and there is a maximum of 4 sleeping rooms per STRP permit? Sound a little daunting? Don’t fret. Many Nashville Airbnb property managers include permitting your property and processing all applicable taxes in their menu of services and I highly recommend you take them up on that offer!

A Nashville Airbnb Property Will Diversify Your Investments

Even if you own other rental properties, Airbnb rentals compete in a different market segment than traditional types of real estate. And if real estate is not currently a part of your investment portfolio, short-term rentals can be an easy way to dip your toe into the pool. Through asset diversification, you help insulate your investment portfolio from market volatility. What’s more, the revenue from short-term rentals may be able to cover more than just the mortgage on the property and this can be an attractive way for first-time real estate investors to get into the market. In many instances, Nashville Airbnb owners have been able to pay off their entire investment property mortgage in less than 5 years, giving them a free and clear asset that can be leveraged into additional investments.

High-Rise Condos Play by Different Rules

There are 9 gleaming high-rise condo buildings in Nashville that are simply breathtaking. They have amazing neighborhood locations, amenities, concierge services and panoramic views of Music City. But, they all have bylaws that forbid them as being used as short-term rentals. Period.

For instance, the Encore condos in downtown Nashville have bylaws that state “no more than 20% of units can be investor-owned and all leases must be at least 360 days in length.” In fact, for those who violate these rules, the fines can get rather steep, exceeding $1,000 per day. Similar rules and fines hold true for Twelve Twelve, Icon, Terrazzo, Adelicia, Viridian, City Lights and practically all condo developments in Nashville.

For a condominium development to allow short-term rentals, the association must amend their bylaws to specifically allow such arrangements. Currently, only the following condo developments allow short-term rentals:

Generally, all planned unit developments (PUDs) have bylaw rental restrictions. These may be developments that include single family homes, townhomes and/or flats, but all have a homeowner’s association. Most attached and detached horizontal property regimes (HPRs) also have short term rental restrictions. There are even entire municipalities that have restrictions like the city of Brentwood that disallows short-term renting altogether.

Rental Property Tax Advantages

Under the new federal tax law that went into effect on January 1, owners of rental properties that are operated as businesses will be able to deduct mortgage interest on these properties, along with business expenses related to the rental. If you operate your Nashville rental as a business, you may also be able to deduct up to 20 percent of net rental income from your income taxes. As always, consult your tax accountant or attorney for advice.

Research Your Potential Airbnb Investment

Only you can decide whether investing in a short-term rental property is right for you. As with any investment, due diligence is warranted. Here is an excellent article on Smart Money Nation that gives you insight into owning an Airbnb and provides a handy calculator.

Once you have decided to pursue a short-term rental investment property, lean on my experience as one of the most well versed and skilled real estate brokers in Nashville. Over the past year, I have represented 71 short-term rentals and have access to several proven rentals that are not currently on the market. Leverage my relationships with local Airbnb management companies to negotiate lower management fees and use my relationship with builders and developers to secure a pre-construction property before it hits the MLS. Call/text me today to begin the process.

Investing in a downtown Nashville Airbnb short term rental is an incredible investment. There’s only one problem: none of the current high-rise condo buildings allow you to short term lease. All buildings restrict owners to a minimum of 12 month rentals and all buildings restrict the number of total units that can have a rental permit at any one time. The restriction typically ranges between 10% and 20% of the total number of condos. This is done so the current occupants of these buildings can have quiet enjoyment of their very experienced real estate. Thus, there are no Airbnb short term rentals available in high-rise condo buildings.

But Grant, I’ve seen some Airbnbs listed for rent in downtown Nashville high-rise buildings. Why are there listings on Airbnb and VRBO? This is always the first question I get when explaining the STR rules to investors. There are high-rise apartment buildings in downtown that do short term lease blocks of their apartment units. These are typically located in the 505 Building, The Sobro and The James.

Call it a sign of the times, but the Rhythm condos at Music Row have prices that are climbing faster than any high-rise condo in Nashville.

A brief timeline: The Rhythm condos began construction at the beginning of 2007 and were completed in 2009. Pre-sales efforts took place during this entire process and condos were sold for an average of $365.17 per square foot. Approximately 75% of the 105 total condos were pre-sold, but when the building opened, only half of the original buyers closed. Clearly, 2009 was a difficult economic time for the country and the Rhythm was not immune. Throughout the balance of 2009 until the end of 2010 the developer continued to sell units. This effort resulted in the sale of 30 additional condos at an average price of $277.20 per square foot. At the beginning of 2011 buyers could smell blood in the water and by the middle of the year the developers were able to reach a settlement with their construction lenders to turn the unsold condos over in a “friendly foreclosure”. Release prices were lowered and all of the remaining condos were very quickly sold at an average of $241.14 per square foot. The last few bank owned condos closed by the second quarter of 2012 and prices have not looked back since.

2012 Q1 Rhythm Condo Sales

2012 Q2 Rhythm Condo Sales

2012 Q3 Rhythm Condo Sales

Current Rhythm Condos for Sale

(#602 is one of my listings and it was sold in less than a week)

Rhythm Condo Price Analysis

As you can see from the active and pending listings, we have been very successful in raising prices since the 1st quarter. We’ve gone from an average of $249/ft to just over $350/ft in the space of only 9 months (I say we, because my team and I at Metropolitan Brokers have listed and sold many of these condos). This price increase represents a nearly 39% jump in under a year. No other high-rise condo in Nashville has come close. All seven Nashville high-rise condo buildings have realized year over year price increases with the Icon and the Adelicia posting the second and third highest gains. The Icon condos have increased prices 17.24% year over year and the Adelicia condos have increased prices 14.81% year over year.

Selling your High-Rise Condo in Nashville

As many know, not only did I represent more than 22% of the buyers and sellers in Rhythm at Music Row, but I have represented almost 300 other condo buyers and sellers in Nashville. It is from this vast experience that I know pricing is not the only skill required of a listing agent. One must also know how to work with appraisers in order to help support these higher prices once contracted. An agent must have lending resources that can help secure buyers advantageous loans and not lose a potential sale over interest rates or mortgage terms. Your agent must know your building like the back of their hand; they must be able to recite the differences in the floor plans, the views and know what is being developed immediately around your building. Selling is no longer just pricing and putting in the MLS. To properly turn a building around in this economy you need knowledge, skill, reputation, leadership and experience.

With sales of over 300 condos (5 this month) and sales volume exceeding $100 million since 2004, no other broker in Tennessee who did not work directly for the developer can come close to my numbers and expertise. I have always worked for private clients and understand what it is to fully market and engage the marketplace. If you are considering selling your condo within the next year, I would love to interview for your business. If you are not and simply want to know what your condo is worth, I have built a tool to calculate your current market value.

Living in the city compared to the suburbs can be quite a different experience. One of the main differences you would notice when living in the city is the population density. Compared to a suburban area, cities usually have a much higher concentration of people and depending on your preferences, this could be exciting or an annoyance.

Less populated suburban areas have been described as a more calm and serene environment. Large concentrations of people result in a more fast-paced lifestyle, so if you do not wish to be a part of the hustle and bustle then a suburban area is recommended for you. Another rather large difference between the city and a suburban area can be the cleanliness of the area. Cities tend to “have a little more character” on the streets than in a suburb, however the lobbies of hotel and office buildings also tend to be more luxurious.

Depending on the size and age of your family, you can determine whether a city or a suburban area would be the better choice for you. Suburban areas are usually geared towards raising younger children, while city life is better suited for those who wish to have easy access to any area you may visit frequently. Although it may not seem possible, living in the city can also provide you with a better education. Most universities and highly regarded schools are located in areas of high traffic in order to receive more applicants. However, those who live in a suburban area can still attend these schools, it would simply be a longer commute.

While cities may be compact and uncomfortable at times, they provide an enormous amount of convenience. Cities will cluster important places close together, making it less of a hassle to go out and run daily errands. They have higher concentrations of libraries, parks, restaurants, transportation, retail, museums and other culturally significant destinations.

One drawback – it can be next to impossible to save money in the city. As a result of the basic density of the city, land prices and construction costs are typically quite high leading to elevated prices for apartments and high-rise condos. Compared to a highly populated city area, suburban area living expenses have been proven to be much less expensive.

Kathleen Hubert is a blogger who writes for a variety of different sites. You may read more of her work at Modular Homes.

The deadline to challenge your Davidson County property assessment is Friday April 20th at 4:30pm. If you do not challenge your property assessment by this deadline, you WILL NOT be able to seek a reduction until next year!

Step #3: Review your tax record. Most importantly, look down to the “Current Property Appraisal” section and find the “Total Value”. This is the amount on which your 2012 property taxes will be calculated.

Step #4: Click on “Previous Appraisal” in the submenu in the top navigation bar

Step #5: Compare your current appraisal with the previous period

Step #6: Determine if you should challenge your tax value assessment. If there is a large difference in your 2011 assessment over your 2009 assessment or if you know the 2011 assessed value to be higher than recent sales in your neighborhood, challenge your assessed value with the Davidson County Tax Assessor’s office immediately. To challenge your assessment, follow the steps outlined in the article I wrote last November.

Who Should Challenge Their Tax Assessment?

While there is no blanket answer, everyone should check their 2011 property assessment to see if a case can be made for a challenge. I have identified pockets of owners who should challenge their tax assessment immediately: owners of luxury homes in Green Hills and Forest Hills over 4,000 square feet should consider challenging. I spot checked several homes that I own in those areas and 3 of them were over assessed. I also found a few over assessments in Hillwood.

Update 4/18/12

This afternoon I received a call from a principle with ACG Equities, the owner/seller of the 5th & Main condos in East Nashville. He explained that ACG took the initiative to challenge all 129 tax assessments as soon as they became aware of the 2011 assessments. I applaud ACG’s actions and can only hope that Pollack Partners follows suit for the Velocity. No word from anyone with Pollack yet.

Please pass this article along to your friends, family, neighbors and clients.

Less than 2 months after the trendy Music Row Rhythm condos sold out, the Encore becomes the latest high-rise condo development to join the growing list of sold out developments. The 333 unit development, built in partnership between the Novare Group of Atlanta and Tony Giarratana of Nashville, broke ground in mid 2006 and was completed in the second quarter of 2008. In that first year of operation, 214 condos closed (64.26%) at an average price of $301.55 per square foot. As the economy grew weaker, so did the sales volume and pricing in the Encore reaching an all time low of 26 condos sold in 2010 (22 developer owned, 4 private resales). In 2011, the Encore turned the volume corner, but the developer allowed prices to slip to their lowest point by selling 36 condos (26 developer owned and 10 private resales) at an average price of $252.72 per square foot. Contributing to the 2011 price weakness is the fact that half of the resales were distressed sales.

Finite Supply Will Lead to Higher Condo Prices

Now that the developers have zero condos left to sell, true market forces will return to the Encore. Currently, there are 15 resale opportunities listed on the MLS which represents only 4.5% of the entire building. Of those 15 condos, 4 are MDHA income restricted condos leaving 11 market value resales. Of those 11 resales, 3 are currently under contract with another 2 working offers. Moreover, with an average asking price of $293.06, prices have already begun to increase rather significantly. Granted, the final sales price will not be as high as the average listing price, but it is clear that a finite supply of condos in the Encore will result in prices that will soon approach and surpass 2008 highs.

Encore Gains Multiple Retail Tenants

It has been several months since celebrated chef Deb Paquette announced her latest venture called Echo (now named Etch) in the Encore, but there are also two more restaurant/coffee tenants readying to make similar announcements. While I am not at liberty to name these tenants directly I can describe one as a high end sushi restaurant that features a rather large and trendy bar. This restaurant will be located next to Etch and be similar in size. The other tenant can be described as a successful local coffee and deli provider who is opening another location. There is no doubt that the impending completion of the billion dollar convention center and hotel complex will contribute to increased retail space leasing activity which in turn leads to an enhanced living experience in the Encore.

Advice and Recommendations

As a condo owner in the Encore and a broker who has represented more than 40 clients in the building, I am in the unique position of being the all time leading outside sales leader as well as an Encore insider. I have crunched the numbers and can steadfastly predict an increase in Encore condo prices over the next 2 years. Buyers who have been on the fence about a purchase in the Encore should have a sense of urgency. Sellers who are considering selling their condo, especially those on higher floors, need to understand the defined finite supply of condos and consider raising their asking prices to match the market. There are no new condo buildings under construction in Nashville and only the Laurel in the Gulch is planned to break ground at some point later this year.

Should you or someone you know be considering making a purchase or selling their condo in the Encore, please contact me. Having sold over 250 condos since 2006, I am the most successful condo broker in Nashville. Put my 10 years of experience to work for you and let me guide you to the most successful and profitable transaction possible.

Realizing that predicting the real estate market is a dangerous enterprise at best, I feel confident in the simple science behind my prediction that future Nashville home demand will jump significantly in 2012. Before I explain why, let me first explain how I build the total demand curve. I define total demand as the number of homes purchased in a particular month plus the number of pending home sales reported in that same month (some have included the number of residential building permits issued as well, but for the purposes of modeling an actual demand, not a confidence factor, I prefer to keep my curve based purely on the demand side). In my opinion, actual sales and pending sales added together give a real time look into the future health of the market, but rooted in reality. Think of the actual sales figure as the anchor that helps stabilize the sometimes unwieldy predictive value of the pending homes figure. Further, understanding that seasonality plays a role in the Nashville market, I have broken the “demand season” into several separate segments.

As you may have noticed, I have purposefully left out mortgage rates as I believe rates and affordability, to a great extent, will have no bearing upon new purchases for the balance of 2012. For the micro economists out there, yes I realize that it is impossible to hold all other factors constant to specifically measure pure demand in a market as complex as real estate, but bear with me as I strip down purchase demand into its purest state.

For the past 9 years, the average total demand has increased 10.94% between the months on March and June with June being the peak of seasonal total demand. If that same trend were to hold true, the total demand in June 2012 would rise to roughly 4,500 homes. This is a level last achieved in April 2010. If you recall, this was also the period in which the Government back first-time homebuyer credit expired creating an artificial demand. Having already achieved a total demand greater than any month in 2011, it is my conclusion that the Nashville real estate market demand has not only recovered, but may see significant price increases within the next 18 months.

Looking at the More Recent Demand Trend

When we strip out the 2 years of governmental meddling as well as 2003 and 2004 and only consider the 5 most recent years of pure market forces, the average total demand has increased 13.78% between the months of March and June. This more realistic view would predict a demand of almost 4,600 homes, a level not seen since the seasonal highs in 2008. More importantly, this level of demand is similar to what was achieved in the first quarters of both 2004 and 2005. While it is too soon to predict the next boom, I do feel that Nashville is firmly entrenched in a steady recovery that will lead to price increases.

Adding to the strength of the recovery is the fact that the Millennial generation (born between 1980 and 2005) has been graduating from college and graduate school for several years. This is significant as the Millennial generation, sometimes called Echo Boomers are the largest generation of Americans, ever. Millennials are 1.3 times larger than the Baby Boomers and over 3 times larger than Generation X, my generation. Millennials have many of the same values as their parents with home ownership being a focus and main definition of their self worth. It stands to reason that as this generation comes of age, so shall the real estate recovery.

Nashville Market Gains Confidence

In speaking with several colleagues at REBAR last week, almost all report the number of multiple-offer situations and “bidding wars” having increased significantly in recent months. Moreover, 8 out of 10 polled Realtors reported an increased confidence among their buyers and 7 out of 10 reported an increased confidence among their sellers.

Further, having the confidence that mortgage rates will remain relatively low through late 2014 due to the Central Bank’s decision to hold short-term interest rates near zero for the next 28 months, has set the stage for a 28 month purchase window. Buyers are certainly not in a rush, but most now operate with the understanding that purchasing a home within the next two years represents their best chance at optimizing the affordability factor. However, as many begin to see increased pricing in the more desirable areas of Nashville, many will pull the trigger in 2012 to further optimize that transaction. Areas like 12th South, Green Hills, Vanderbilt and the Gulch have already seen significant price gains in the past year.

Work with Grant Hammond

I have a true passion for real estate. Each transaction becomes personal and every deal is negotiated as if it were my own. I would never advise one of my clients sign a purchase or a sale I did not believe in. Many of my clients describe my real estate practice as professional, thorough, and detailed oriented and some have even called me anal and slightly obsessive. I feel all are compliments. But, the one trait I possess that very few agents have is the ability to walk away from a deal. In that I mean, I am financially in a position that allows me to advise my clients to walk away from a deal that is not perfect and continue looking for the best property or wait for a better offer. It has always been and always will be my goal to put my clients in the best position to succeed.